Not since Marx identified the manufacturing plants of
Manchester as the blueprint for the new capitalist society has there been a
deeper transformation of the fundamentals of our social life. As political,
economic, and social systems transform themselves into distributed networks,
a new human dynamic is emerging: peer to peer (P2P). As P2P gives rise to the
emergence of a third mode of production, a third mode of governance, and a
third mode of property, it is poised to overhaul our political economy in
unprecedented ways. This essay aims to develop a conceptual framework ('P2P theory')
capable of explaining these new social processes.

Peer to Peer

P2P does
not refer to all behavior or processes that takes
place in distributed networks: P2P specifically designates those processes
that aim to increase the most widespread participation by equipotential
participants. We will define these terms when we examine the characteristics
of P2P processes, but here are the most general and important
characteristics.

P2P processes:

produce use-value through the free cooperation of
producers who have access to distributed capital: this is the P2P
production mode, a 'third mode of production' different from for-profit
or public production by state-owned enterprises. Its product is not
exchange value for a market, but use-value for a community of users.

are governed by the community of producers
themselves, and not by market allocation or corporate hierarchy: this is
the P2P governance mode, or 'third mode of governance.'

make use-value freely accessible on a universal
basis, through new common property regimes. This is its distribution or
'peer property mode': a 'third mode of ownership,' different from
private property or public (state) property.

The Infrastructure of P2P

What has
been needed to facilitate the emergence of peer to peer processes? The first
requirement is the existence of a technological infrastructure that operates
on peer to peer processes and enables distributed access to 'fixed' capital.
Individual computers that enable a universal machine capable of executing any
logical task are a form of distributed 'fixed capital,' available at low cost
to many producers. The internet, as a point to point network, was
specifically designed for participation by the edges (computer users) without
the use of obligatory hubs. Although it is not fully in the hands of its
participants, the internet is controlled through distributed governance, and
outside the complete hegemony of particular private or state actors. The
internet's hierarchical elements (such as the stacked IP protocols, the
decentralized Domain Name System, etc...) do not deter participation. Viral
communicators, or meshworks, are a logical
extension of the internet. With this methodology, devices create their own
networks through the use of excess capacity, bypassing the need for a
pre-existing infrastructure. The 'Community Wi-Fi'
movement, Open Spectrum advocacy, file-serving television, and alternative
meshwork-based telecommunication infrastructures are exemplary of this trend.

The
second requirement is alternative information and communication systems which
allow for autonomous communication between cooperating agents. The web (in
particular the Writeable Web and the Web 2.0 that is in the process of being
established) allows for the universal autonomous production, dissemination,
and 'consumption' of written material while the associated podcasting and webcasting
developments create an 'alternative information and communication
infrastructure' for audio and audiovisual creation. The existence of such an
infrastructure enables autonomous content production that may be distributed
without the intermediary of the classic publishing and broadcasting media
(though new forms of mediation may arise).

The
third requirement is the existence of a 'software' infrastructure for
autonomous global cooperation. A growing number of collaborative tools, such
as blogs and wiki's,
embedded in social networking software facilitate the creation of trust and
social capital, making it possible to create global groups that can create
use-value without the intermediary of manufacturing or distribution by
for-profit enterprises.

The
fourth requirement is a legal infrastructure that enables the creation of
use-value and protects it from private appropriation. The General Public
License (which prohibits the appropriation of software code), the related
Open Source Initiative, and certain versions of the Creative Commons license fulfill this role. They enable the protection of common
use-value and use viral characteristics to spread. GPL
and related material can only be used in projects that in turn put their
adapted source code in the public domain.

The
fifth requirement is cultural. The diffusion of mass intellectuality, (i.e.
the distribution of human intelligence) and associated changes in ways of
feeling and being (ontology), ways of knowing (epistemology) and value
constellations (axiology) have been instrumental in creating the type of
cooperative individualism needed to sustain an ethos which can enable P2P
projects.

The Characteristics of P2P

P2P
processes occur in distributed networks. Distributed networks are networks in
which autonomous agents can freely determine their behavior
and linkages without the intermediary of obligatory hubs. As Alexander
Galloway insists in his book on protocollary power,
distributed networks are not the same as decentralized networks, for which
hubs are obligatory. P2P is based on distributed power and distributed access
to resources. In a decentralized network such as the U.S.-based airport
system, planes have to go through determined hubs; however, in distributed
systems such as the internet or highway systems, hubs may exist, but are not
obligatory and agents may always route around them.

P2P
projects are characterized by equipotentiality or
'anti-credentialism.' This means that there is no a
priori selection to participation. The capacity to cooperate is verified
in the process of cooperation itself. Thus, projects are open to all comers
provided they have the necessary skills to contribute to a project. These
skills are verified, and communally validated, in the process of production
itself. This is apparent in open publishing projects such as citizen
journalism: anyone can post and anyone can verify the veracity of the
articles. Reputation systems are used for communal validation. The filtering
is a posteriori, not a priori. Anti-credentialism is therefore to be contrasted to
traditional peer review, where credentials are an essential prerequisite to
participate.

P2P
projects are characterized by holoptism. Holoptism is the implied capacity and design of peer to
peer processes that allows participants free access to all the information
about the other participants; not in terms of privacy, but in terms of their
existence and contributions (i.e. horizontal information) and access to the
aims, metrics and documentation of the project as a whole (i.e. the vertical
dimension). This can be contrasted to the panoptism
which is characteristic of hierarchical projects: processes are designed to
reserve 'total' knowledge for an elite, while participants only have access
on a 'need to know' basis. However, with P2P projects, communication is not
top-down and based on strictly defined reporting rules, but feedback is
systemic, integrated in the protocol of the cooperative system.

The
above does not exhaust the characteristics of peer production. Below, we will
continue our investigation of these characteristics in the context of a
comparison with other existing modes of production.

P2P and the Other Modes of Production

The
framework of our comparison is the Relational Models theory of anthropologist
Alan Page Fiske, discussed in his major work The
Structure of Social Life. The fact that modes of production are embedded
in inter-subjective relations -- that is, characterized by particular
relational combinations -- provides the necessary framework to distinguish
P2P. According to Fiske, there are four basic types
of inter-subjective dynamics, valid across time and space, in his own words:

People use just four fundamental models for organizing
most aspects of sociality most of the time in all cultures. These models are
Communal Sharing, Authority Ranking, Equality Matching, and Market Pricing.
Communal Sharing (CS) is a relationship in which people treat some dyad or
group as equivalent and undifferentiated with respect to the social domain in
question. Examples are people using a commons (CS with respect to utilization
of the particular resource), people intensely in love (CS with respect to
their social selves), people who "ask not for whom the bell tolls, for
it tolls for thee" (CS with respect to shared suffering and common
well-being), or people who kill any member of an enemy group indiscriminately
in retaliation for an attack (CS with respect to collective responsibility).
In Authority Ranking (AR) people have asymmetric
positions in a linear hierarchy in which subordinates defer, respect, and
(perhaps) obey, while superiors take precedence and take pastoral
responsibility for subordinates. Examples are military hierarchies (AR in decisions, control, and many other matters),
ancestor worship (AR in offerings of filial piety
and expectations of protection and enforcement of norms), monotheistic
religious moralities (AR for the definition of
right and wrong by commandments or will of God), social status systems such
as class or ethnic rankings (AR with respect to
social value of identities), and rankings such as sports team standings (AR with respect to prestige). AR
relationships are based on perceptions of legitimate asymmetries, not
coercive power; they are not inherently exploitative (although they may
involve power or cause harm).

In
Equality Matching relationships people keep track of the balance or
difference among participants and know what would be required to restore
balance. Common manifestations are turn-taking, one-person one-vote
elections, equal share distributions, and vengeance based on
an-eye-for-an-eye, a-tooth-for-a-tooth. Examples include sports and games (EM with respect to the rules, procedures, equipment and
terrain), baby-sitting co-ops (EM with respect to
the exchange of child care), and restitution in-kind (EM
with respect to righting a wrong). Market Pricing relationships are oriented
to socially meaningful ratios or rates such as prices, wages, interest,
rents, tithes, or cost-benefit analyses. Money need not be the medium, and MP
relationships need not be selfish, competitive, maximizing, or materialistic
-- any of the four models may exhibit any of these features. MP relationships
are not necessarily individualistic; a family may be the CS or AR unit running a business that operates in an MP mode
with respect to other enterprises. Examples are property that can be bought,
sold, or treated as investment capital (land or objects as MP), marriages
organized contractually or implicitly in terms of costs and benefits to the
partners, prostitution (sex as MP), bureaucratic cost-effectiveness standards
(resource allocation as MP), utilitarian judgments about the greatest good
for the greatest number, or standards of equity in judging entitlements in
proportion to contributions (two forms of morality as MP), considerations of
"spending time" efficiently, and estimates of expected kill ratios
(aggression as MP).1

Every
type of society or civilization is a mixture of these four modes, but it can
plausibly be argued that one mode is always dominant and imprints the other
subservient modes. Historically, the first dominant mode was kinship or
lineage based reciprocity, the so-called tribal gift economies. The key
relational aspect was 'belonging'. Gifts created obligations and relations
beyond the next of kin, creating a wider field of exchange. Agricultural or
feudal-type societies were dominated by authority ranking, that is, they were
based on allegiance. Finally, it is clear that the capitalist economy is
dominated by market pricing.

P2P and the Gift Economy

P2P is
often described as a 'gift economy' (see Richard Barbrook
for an example). However, it is our contention that this is somewhat
misleading. The key reason is that peer to peer is not a form of equality
matching; it is not based on reciprocity. P2P follows the adage: each
contributes according to his capacities and willingness, and each takes
according to his needs. There is no obligatory reciprocity involved. In the
pure forms of peer production, producers are not paid. Thus, if there is
'gifting' it is entirely non-reciprocal gifting, the use of peer-produced
use-value does not create a contrary obligation. The emergence of peer to
peer is contemporaneous with new forms of the gift economy, such as the Local
Exchange Trading Systems and the use of reciprocity-based complementary
currencies; however, these do not qualify as peer production.

That is
not to say that these forms are not complementary, since both equality
matching and communal shareholding derive from the same spirit of gifting.
Peer production can most easily operate in the sphere of immaterial goods,
where the input is free time and the available surplus of computing
resources. Equality matching, reciprocity-based schemes and cooperative
production are necessary in the material sphere where the cost of capital
intervenes. At present, peer production offers no solution to the material
survival of its participants. Therefore, many people inspired by the
egalitarian ethos will resort to cooperative production, the social economy,
and other schemes from which they can derive an income, while at the same
time honoring their values. In this sense, these
schemes are complementary.

P2P and Hierarchy

P2P is
not hierarchy-less, not structure-less, but usually characterized by flexible
hierarchies and structures based on merit that are used to enable
participation. Leadership is also 'distributed.' Most often, P2P projects are
led by a core of founders, who embody the original aims of the project, and
who coordinate the vast number of individuals and microteams
working on specific patches. Their authority and leadership derives from
their input into the constitution of the project, and on their continued
engagement. It is true that peer projects are sometimes said to be
'benevolent dictatorships'; however, one must not forget that since the
cooperation is entirely voluntary, the continued existence of such projects
is based on the consent of the community of producers, and on 'forking' (that
is, the creation of a new independent project, is always possible).

The
relation between authority and participation, and its historical evolution,
has been most usefully outlined by John Heron:

There seem to be at least four degrees of cultural
development, rooted in degrees of moral insight:

1.autocratic
cultures which define rights in a limited and oppressive way and there are no
rights of political participation;

2.narrow
democratic cultures which practice political participation through
representation, but have no or very limited participation of people in
decision-making in all other realms, such as research, religion, education,
industry etc.;

3.wider
democratic cultures which practice both political participation and varying
degree of wider kinds of participation;

4.commons
p2p cultures in a libertarian and abundance-oriented global network with equipotential rights of participation of everyone in every
field of human endeavor.

These
four degrees could be stated in terms of the relations between hierarchy,
co-operation and autonomy.

2.Hierarchy
empowers a measure of co-operation and autonomy in the political sphere only;

3.Hierarchy
empowers a measure of co-operation and autonomy in the political sphere and
in varying degrees in other spheres;

4.The
sole role of hierarchy is in its spontaneous emergence in the initiation and
continuous flowering of autonomy-in-co-operation in all spheres of human
endeavor.2

P2P and Communal Shareholding

With
P2P, people voluntarily and cooperatively construct a commons according to
the communist principle: "from each according to his abilities, to each
according to his needs." The use-value created by P2P projects is
generated through free cooperation, without coercion toward the producers,
and users have free access to the resulting use value. The legal
infrastructure that we have described above creates an 'Information Commons.'
The new Commons is related to the older form of the commons (most notably the
communal lands of the peasantry in the Middle Ages and of the original mutualities of the workers in the industrial age), but it
also differs mostly through its largely immaterial characteristics. The older
Commons were localized, used, and sometimes regulated by specific
communities; the new Commons are universally available and regulated by
global cyber-collectives, usually affinity groups. While the new Commons is centered around non-rival goods (that is, in a context of
abundance) the older forms of physical Commons (air, water, etc.)
increasingly function in the context of scarcity, thus becoming more
regulated.

P2P and the Market: The Immanence vs.
Transcendence of P2P

P2P and the Market

P2P
exchange can be considered in market terms only in the sense that individuals
are free to contribute, or take what they need, following their individual
inclinations, with a invisible hand bringing it all together, but without any
monetary mechanism. They are not true markets in any real sense: neither
market pricing nor managerial command are required to make decisions
regarding the allocation of resources. There are further differences:

Markets
do not function according to the criteria of collective intelligence and
holoptism, but rather, in the form of
insect-like swarming intelligence. Yes, there are autonomous agents in a
distributed environment, but each individual only sees his own immediate
benefit.

Markets
are based on 'neutral' cooperation, and not on synergistic cooperation:
no reciprocity is created.

Markets
operate for the exchange value and profit, not directly for use value.

Whereas
P2P aims at full participation, markets only fulfill
the needs of those with purchasing power.

The disadvantages of markets include:

They
do not function well for common needs that do not involve direct payment
(national defense, general policing, education
and public health). In addition, they fail to take into account negative
externalities (the environment, social costs, future generations).

Since
open markets tend to lower profit and wages, they always give rise to
anti-markets, where oligopolies and monopolies use their privileged
position to have the state 'rig' the market to their benefit.

P2P and Capitalism

Despite
significant differences, P2P and the capitalist market are highly
interconnected. P2P is dependent on the market and the market is dependent on
P2P.

Peer
production is highly dependent on the market because peer production produces
use-value through mostly immaterial production, without directly providing an
income for its producers. Participants cannot live from peer production,
though they derive meaning and value from it, and though it may out-compete,
in efficiency and productivity terms, the market-based for-profit
alternatives. Thus peer production covers only a section of production, while
the market provides for nearly all sections; peer producers are dependent on
the income provided by the market. So far, peer production has been created
through the interstices of the market.

But the
market and capitalism are also dependent on P2P. Capitalism has become a
system relying on distributed networks, in particular on the P2P
infrastructure in computing and communication. Productivity is highly reliant
on cooperative teamwork, most often organized in ways that are derivative of
peer production's governance. The support given by major IT companies to
open-source development is a testimony to the use derived from even the new
common property regimes. The general business model seems to be that business
'surfs' on the P2P infrastructure, and creates a surplus value through
services, which can be packaged for exchange value. However, the support of
free software and open sources by business poses an interesting problem. Is
corporate-sponsored, and eventually corporate managed, FS/OS software still
'P2P': only partially. If it uses the GPL/OSI legal
structures, it does result in common property regimes. If peer producers are
made dependent on the income, and even more so, if the production becomes
beholden to the corporate hierarchy, then it would no longer qualify as peer
production. Thus, capitalist forces mostly use partial implementations of
P2P. The tactical and instrumental use of P2P infrastructure, (collaborative
practices) is only part of the story. In fact, contemporary capitalism's
dependence on P2P is systemic. As the whole underlying infrastructure of capitalism
becomes distributed, it generates P2P practices and becomes dependent on
them. The French-Italian school of 'cognitive capitalism' stresses that value
creation today is no longer confined to the enterprise, but beholden to the
mass intellectuality of knowledge workers, who through their lifelong
learning/experiencing and systemic connectivity, constantly innovate within
and without the enterprise. This is an important argument, since it would
justify what we see as the only solution for the expansion of the P2P sphere
into society at large: the universal basic income. Only the independence of
work and the salary structure can guarantee that peer producers can continue
to create this sphere of highly productive use value.

Does all
this mean that peer production is only immanent to the system, productive of
capitalism, and not in any way transcendent to capitalism?

P2P and the Netarchists

More
important than the generic relationship that we just described, is the fact
that peer to peer processes also contribute to more specific forms of
distributed capitalism. The massive use of open source software in business,
enthusiastically supported by venture capital and large IT companies such as
IBM, is creating a distributed software platform that will drastically
undercut the monopolistic rents enjoyed by companies such as Microsoft and
Oracle, while Skype and VoIP
will drastically redistribute the telecom infrastructure. In addition, it
also points to a new business model that is 'beyond' products, focusing
instead on services associated with the nominally free FS/OS software model.
Industries are gradually transforming themselves to incorporate
user-generated innovation, and a new intermediation may occur around
user-generated media. Many knowledge workers are choosing non-corporate paths
and becoming mini-entrepreneurs, relying on an increasingly sophisticated
participatory infrastructure, a kind of digital corporate commons.

The
for-profit forces that are building and enabling these new platforms of participation
represent a new subclass, which I call the netarchical
class. If cognitive capitalism is to be defined by the primacy of
intellectual assets over fixed capital industrial assets, and thus on the
reliance of an extension of IP rights to establish monopolistic rents, (as
the vectoral capitalists described by Mackenzie Wark derive their power from the control of the media
vectors) then these new netarchical capitalists
prosper from the enablement and exploitation of the participatory networks.
It is significant that Amazon built itself around user reviews, eBay lives on
a platform of worldwide distributed auctions, and Google is constituted by
user-generated content. However, although these companies may rely on IP
rights for the occasional extra buck, it is not in any sense the core of
their power. Their power relies on their ownership of the platform.

More
broadly, netarchical capitalism is a brand of
capital that embraces the peer to peer revolution, all those ideological
forces for whom capitalism is the ultimate horizon of human possibility. It
is the force behind the immanence of peer to peer. Opposed to it, though
linked to it in a temporary alliance, are the forces of Common-ism, those
that put their faith in the transcendence of peer to peer, in a reform of the
political economy beyond the domination of the market.

Transcendent Aspects of P2P

Indeed,
our review of the immanent aspects of peer to peer, on how it is both
dependent on and productive of capitalism, does not exhaust the subject. P2P
has important transcendent aspects which go beyond the limitations set by the
for-profit economy:

peer
production effectively enables the free cooperation of producers, who
have access to their own means of production, and the resulting
use-value of the projects supercedes
for-profit alternatives.

Historically,
though forces of higher productivity may be temporarily embedded in the old
productive system, they ultimately lead to deep upheavals and reconstitutions
of the political economy. The emergence of capitalist modes within the feudal
system is a case in point. This is particularly significant because leading
sectors of the for-profit economy are deliberately slowing down productive
growth (in music; through patents) and trying to outlaw P2P production and
sharing practices:

peer
governance transcends both the authority of the market and the state

the
new forms of universal common property, transcend the limitations of
both private and public property models and are reconstituting a dynamic
field of the Commons.

At a
time when the very success of the capitalist mode of production endangers the
biosphere and causes increasing psychic (and physical) damage to the
population, the emergence of such an alternative is particularly appealing,
and corresponds to the new cultural needs of large numbers of the population.
The emergence and growth of P2P is therefore accompanied by a new work ethic
(PekkaHimanen'sHacker
Ethic), by new cultural practices such as peer circles in spiritual
research (John Heron's cooperative inquiry), but most of all, by a new
political and social movement which is intent on promoting its expansion.
This still nascent P2P movement, (which includes the Free Software and Open
Source movement, the open access movement, the free culture movement and
others) which echoes the means of organization and aims of the
alter-globalization movement, is fast becoming the equivalent of the
socialist movement in the industrial age. It stands as a permanent
alternative to the status quo, and the expression of the growth of a new
social force: the knowledge workers.

In fact,
the aim of peer to peer theory is to give a theoretical underpinning to the
transformative practices of these movements. It is an attempt to create a
radical understanding that a new kind of society, based on the centrality of
the Commons, and within a reformed market and state, is in the realm of human
possibility. Such a theory would have to explain not only the dynamic of peer
to peer processes proper, but also their fit with other inter-subjective
dynamics. For example, how P2P molds reciprocity
modes, market modes and hierarchy modes; on what ontological, epistemological
and axiological transformations this evolution is resting; and what a
possible positive P2P ethos can be. A crucial element of such a peer to peer
theory would be the development of tactics and strategy for such
transformative practice. The key question is: can peer to peer be expanded
beyond the immaterial sphere in which it was born?

The Expansion of the P2P mode of production

Given
the dependence of P2P on the existing market mode, what are its chances to
expand beyond the existing sphere of non-rival immaterial goods?

Here are
a number of theses about this potential:

P2P
can arise not only in the immaterial sphere of intellectual and software
production, but wherever there is access to distributed technology:
spare computing cycles, distributed telecommunications and any kind of
viral communicator meshwork.

P2P
can arise wherever other forms of distributed fixed capital are
available: such is the case for carpooling, which is the second most
used mode of transportation in the U.S.

P2P
can arise wherever the process of design may be separated from the
process of physical production. Huge capital outlines for production can
co-exist with a reliance on P2P processes for design and conception.

P2P
can arise wherever financial capital can be distributed. Initiatives
such as the ZOPA bank point in that direction.
Cooperative purchase and use of large capital goods are a possibility.
State support and funding of open source development is another example.

P2P
could be expanded and sustained through the introduction of universal
basic income.

The
latter, which creates an income independent of salaried work, has the
potential to sustain a further development of P2P-generated use-value.
Through the 'full activity' ethos (rather than full employment) of P2P, the
basic income receives a powerful new argument: not only as efficacious in
terms of poverty and unemployment, but as creating important new use-value
for the human community.

However,
as it is difficult to see how use-value production and exchange could be the
only form of production, it is more realistic to see peer to peer as part of
a process of change. In such a scenario, peer to peer would both co-exist
with and profoundly transform other intersubjective
modes.

A
Commons-based political economy would be centered
around peer to peer, but it would co-exist with:

A
powerful and re-invigorated sphere of reciprocity (gift-economy) centered around the introduction of time-based
complementary currencies.

A
reformed sphere for market exchange, the kind of 'natural capitalism'
described by Paul Hawken, David Korten and Hazel Henderson, where the costs for
natural and social reproduction are no longer externalized, and which
abandons the growth imperative for a throughput economy as described by
Herman Daly.

A
reformed state that operates within a context of multistakeholdership
and which is no longer subsumed to corporate interests, but act as a
fair arbiter between the Commons, the market and the gift economy.

Such a
goal could be the inspiration for a powerful alternative to neoliberal dominance, and create a kaleidoscope of
'Common-ist' movements broadly inspired by such
goals.